DJ INTERVIEW: ING Retail: Growth In Romania, Poland, India

Dutch financials group ING Group NV's (ING) retail banking will continues to expand its banking-branch network in Poland, Romania and India, but at the same time still sees growth opportunities in its home region, a board member told Dow Jones Newswires.

ING in recent years has steered clear of wide-scale acquisitions in fragmented or high-growth markets - unlike domestic rivals ABN Amro (ABN) in Italy and Fortis NV (30086.AE) in Turkey. Instead, it has focused on a small number of countries with significant growth potential.

"We didn't feel the need to make large acquisitions as we have enough opportunities for organic growth," said Eli Leenaars, board member for retail and private banking at ING."We could have played a prominent role (in more markets) if we wanted to," he added. "But they (some recently acquired banks) were simply not attractive to us."

Rather than overpaying for the acquisition of banks, ING chose to invest in expanding its bank franchise organically and exporting its Dutch banking know-how into those markets.

Leenaars said the retail arm has always primarily been interested in markets with "a convenience gap," where domestic banks cannot offer the same level of service as ING. For entering the more mature markets, such as the U.K. and France, the parent company's strategy is to rely on its cyberbank, ING Direct, which is headed by another board member, Dick Harryvan.

No. 3 Ranking In Poland

In Poland, the company has been active since 1995 after buying a stake in Bank Slaski, of which it now owns 75%. ING in Poland is the country's third-largest bank, with around 350 offices. That number is, after a period of stabilization, increasing again, Leenaars said without being more specific.

In Romania, ING started from scratch and now has a network of 90 outlets, or a 6.3% market share. They aren't full banking branches but rather a mix of the so-called "self banks" that exist in Belgium - where a client can almost do all retail transactions at an automated machine - and ING Direct, which mainly operates online.

ING Romania intends to grow its number of branches to 250 by 2009, a company spokesman has said.

"It's very tech-driven, hardly any human interaction," Leenaars said of the self banks. However, he added that every branch typically has two to three employees who primarily fulfill an advisory role.

The model is internally known as the "Romania-concept" and is already being exported to other countries, such as India, Leenaars said. "It's the leading concept for the future," he added.

Leenaars won't totally exclude entering new countries, but noted that with Romania and Poland, the bank and insurer already potentially reaches out to a large portion of the population in Eastern and Central Europe.

Moreover, it's easier to operate "without the complexity of 12 countries," Leenaars said.

Besides Poland and Romania, ING retail banking is also expanding in India through ING Vysya Bank, in which the Amsterdam-based conglomerate holds a 44% controlling stake.

Leenaars suggested he would rather have full control of the Indian bank, and also in Bank Slaski, but noted the Indian market is closed to full foreign ownership until 2009. Asked whether ING would pursue full ownership of Vysya, he said that "it could be a possibility."

Vysya has 450 branches and is mainly active in southern Indian, near Bangalore. ING opened 10 new branches this year.

In China, ING also owns a near-20% stake in Bank of Beijing and provides two board members. "We're not a controlling shareholder, but we work together to exchange knowledge and know-how. It's an enormous educational process."

Benelux Not Boring

In the Netherlands, ING operates through Postbank and ING Bank. The mortgages market is "irrationally competitive" and ING shed some market share in the past half year. "But we're not nervous at all," Leenaars said. "We're more interested in preserving the value we already created."

The Benelux is considered by many analysts as a low-growth market, but Leenaars wants to nuance that view: "In terms of volume, the Benelux is actually bigger than Spain and Italy. It is, in fact, one of the strongest growing markets in Western Europe."

Swiss financials group UBS recently hosted a conference on Dutch financials with the central theme: "Is Benelux boring?" According to Leenaars: "It's not boring. It's a very wealthy market with highly efficient banks. Mature, but not as low-growth as many think."

The 45-year-old banker was previously chairman of ING Poland and Latin America and also worked at Banque Bruxelles Lambert in Belgium. ING's chief executive, Michel Tilmant, was CEO of BBL until it was acquired by ING in 1998.

ING's retail bank in the second quarter of 2006 made a EUR452 million in underlying profit before tax, or 17% of the group's total.
Source:wiadomosci.onet.p